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Worldwide semiconductor sales suffered their worst month in 14 years in February, dropping more than 20% year-over-year as the industry seeks to work its way out of an inventory glut that followed two years of pandemic-driven shortages.
Global sales in February plummeted 20.7% to $39.7 billion from the $50 billion sold in February 2022, according to the Semiconductor Industry Association late Thursday. The last time monthly sales dropped as much was in 2009, according to SIA data.
Japan ended up being the only region where sales increased, albeit a paltry 1.2% to $3.9 billion. Meanwhile, sales in China fared the worst following last year’s tech ban, dropping 34.2% to $10.97 billion in February. But those sales still managed to surpass U.S. sales, which fell 14.8% to $9.95 billion.
“Global semiconductor sales continued to slow in February, decreasing year-to-year and month-to-month for the sixth consecutive month,” said John Neuffer, SIA chief executive, in a statement. “Short-term market cyclicality and macroeconomic headwinds have led to cooling sales, but the market’s medium- and long-term prospects remain bright, thanks to growing demand across a range of end markets.”
SIA
Granted, record sales in 2022 — when the global chip shortage flipped to a glut mid-year — made comparisons tough.
Read: Chip sales hit a record in 2022, even as a pandemic shortage turned into a glut
Over the past 12 months, the PHLX Semiconductor Index
SOX,
has declined 3.8%, helped along by a 21.3% rally year to date. In comparison, the S&P 500 index
SPX,
is down 8.4% over the past 12 months, but is up 6.9% year to date, and the tech-heavy Nasdaq Composite Index
COMP,
is down 13% over the past 12 months, but up 15.5% year to date.
Much of the enthusiasm behind 2023’s rally in chip stocks stems from a slew of products aimed at supporting the massive amounts of computing power required by the growing AI industry.
Recently, Nvidia Corp.
NVDA,
showcased hardware and software products focused on handling AI workloads, and company founder and Chief Executive Jensen Huang forecast that revenue from AI would become “quite large” over the next 12 months.
Read: As chip sales dry up, Nvidia CFO says spending on AI will save companies money
That puts pressure on other chip makers to keep up; companies like Advanced Micro Devices Inc.
AMD,
which bolstered its data-center holdings with last year’s acquisition of Xilinx, and Intel Corp.
INTC,
which gained a rare upgrade from a longtime bear, and turned in its biggest monthly share price gain since 2001 in March with a 31% pop.
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